The Medicines Company Case Analysis

Topics: Marketing, Pharmacology, Pharmaceutical industry Pages: 7 (2114 words) Published: November 13, 2006
Background

The Medicines Company's business model is to acquire or lease products in the development stage from leading pharmaceutical companies. Essentially, they will acquire or lease drugs that have been abandoned or shelved due to lack of early stage research results. The company's success lays on their being able to save "rejected" compounds, receive FDA approval for their use, and still turn a profit. This case study provides a look at the first few years of this start-up company, from the initial review of abandoned drugs to the release of their first drug Angiomax.

Angiomax is a direct competitor to Heparin, the leading anticoagulant used in the market. The company continued research on this drug, which was licensed from Biogen in 1997, and received approval for marketing in 2001 for use in coronary angioplasty procedures. The company continued working towards approval for the use of Angi0max in treating arterial thrombosis and other related conditions.

Problems

Analysis of the Medicines Company case revealed several critical aspects that need to be addressed. The pharmaceutical industry can be very profitable, but is also very risky. As described in the case, bringing a new drug to market is a costly and lengthy process requiring an average of 10 years. Big Pharmaceutical companies struggle to keep upcoming drugs in their pipeline to provide revenue when existing drugs come off patent and are replaced by generic compounds. With 1 in 4000 compounds making it to market, there is significant risk of failure that can be reduced by having many compounds in development. Additionally, a drug company's reputation can easily be tarnished by safety issues with a compound, dramatically affecting their sales.

Large pharmaceutical companies tend to focus on blockbuster drugs to gain more profits so there may be compounds that are discarded because they hold smaller revenue potential. However, a business plan that focuses on "rescuing" these and other abandoned drugs holds many of the same risks and potentially more than Big Pharmaceutical companies face. The Medicines Company lacks a thorough business plan that addresses these issues and their own unique challenges which include:

1. Higher risk of product failure when acquiring an already "failed" drug

2. Lack of product pipeline for future revenue

3. Discarded compounds may come from a variety of different classes and targets requiring expertise in several areas

4. Marketing and selling plan and product to key decision makers

5. Pricing Angiomax, and other premium compounds, against existing commodity drugs

Analysis

The Medicines Company was founded in 1996 and to date has only one product on the market, Angiomax. The case describes two other compounds, IS-159 and CTV-05, that the company acquired which both seem to have been abandoned. It is apparent that the Medicines Company will face the same challenges as large pharmaceutical companies with product failure. Drug companies reject compounds for a variety of good reasons including safety, efficacy, profit potential, and other reasons. If the Medicines Company takes on these drugs they have to overcome these already identified challenges.

The Medicines Company established four selection criteria for acquiring compounds. These criteria rely heavily on assumptions about the remainder of the development process, product performance, and market potential. There is no guarantee that the product will fulfill these qualifiers or even if it does that it will be successful. CTV-05, which was acquired early in the development process, held even more risk since it was purchased without first knowing if it was effective.

Primary pharmaceutical companies have several drugs on the market generating revenue and several compounds in various stages of the development pipeline for future growth. This model creates a safeguard for drugs that fail in development or run into problems on the market. It...
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